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Weekly Insight

Low Inflation

11 February 2025
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Low Inflation

Global Markets

US President, Donald Trump, announced plans to unveil reciprocal tariffs last week, escalating the ongoing trade war and further fueling inflation fears, wiping out the week’s gain in the US stock market. The S&P 500 fell 0.95% on Friday and closed the week down 0.24%. US economic data revealed weakening consumer sentiment amid inflation worries, while mixed jobs figures pointed to a moderating but still healthy labor market, with notable wage growth. This strengthens the Federal Reserve's position that it is in no hurry to lower borrowing costs.


Indonesian Markets

Indonesia's capital market diverged last week, with investors shifting from stocks to bonds. This shift was likely influenced by the recent inflation report, which showed a YoY rate of 0.76%, significantly below consensus forecasts.

The Jakarta Composite Index (JCI) plummeted 5.16%, led by a significant 14.52% drop in Bank Mandiri (BMRI) shares. This decline followed a JP Morgan report that underweight the bank. During the week, foreign investors withdrew US$231.1 million from the stock market (as of Feb 7th), while bond inflows reached US$371.7 million (as of Feb 6th).

Notably, global funds purchased a net US$581.3 million in Indonesian
bonds on Feb 6th, the largest single-day purchase since Sept 19th. Consequently, the 10-year government bond yield dropped to 6.89%, while the JISDOR remained relatively stable at around 16,300 per US dollar.


Weekly Highlight on Economic Indicators


Our Take:

The stock market's significant downturn led to losses in our equity and balanced funds. But, our fixed income fund benefited on the bond market rally, exceeding the performance of comparable funds.

Valbury Prime Dynamic Equity decreased by 3.98% (BM: -3.14%), Valbury Investasi Berimbang decreased by 3.71% (BM: -1.34%). On the other hand, Valbury Stable Growth Fund increased by 0.98% (BM: 0.52%) and Valbury Money Market I increased by 0.10% (BM: 0.10%).

Low inflation contributed to Bank Indonesia's (BI) surprise interest rate reduction last month. While this week's data may offer some insights, the direction of BI's policy at next week's meeting remains uncertain.

The recommendation for investment to our investors (in order) :
Fixed Income Fund > Money Market Fund > Balanced Fund > Equity Fund.


Author : KBVAM Investment Team


DISCLAIMER :
INVESTMENT THROUGH MUTUAL FUNDS CONTAINS RISKS. PROSPECTIVE INVESTORS MUST READ AND UNDERSTAND THE PROSPECTUS BEFORE DECIDING TO INVEST THROUGH MUTUAL FUNDS. PAST PERFORMANCE DOES NOT REFLECT FUTURE PERFORMANCE.

This document was prepared based on information from reliable sources by PT KB Valbury Asset Management. PT KB Valbury Asset Management does not guarantee the accuracy, adequacy or completeness of the information and materials provided. PT KB Valbury Asset Management Indonesia is not responsible for any legal and financial consequences arising, whether against or suffered by any person or party and in any way deemed to be a result of actions taken on the basis of all or part of this document.